Section 907.10  Authority

This Rule is issued by the Director of Insurance pursuant to Section 401 of the Illinois Insurance Code, which empowers the Director to make reasonable rules and regulations as may be necessary for making effective the insurance laws of this State.  This Part implements Sections 20, 32 and 147.1 (3) (e) of the Illinois Insurance Code.

Section 907.20  Definition of Shares

The word shares, as used in this Part, shall include securities issued by and representing an interest in any insurance company.  However, the word shares shall not include rights to shares (as distinguished from the shares proper) under stock option plans which have been approved by the Director of Insurance.

Section 907.30  Applicability

This Part shall apply to the sale of shares of all domestic stock companies.

(Source:  Amended at 14 Ill. Reg. 16920, effective October 2, 1990)

Section 907.40  Exempt Transactions

The transactions enumerated in Sections 907.50, 907.60 and 907.70 of this Part are hereby declared exempt from the provisions of Section 147.1 of the Illinois Insurance Code.

Section 907.50  Private Sale

Solicitations of purchases in Illinois to not more than 70 persons and actual sales in Illinois to not more than 35 of such persons of shares of an issuer for the direct or indirect benefit of the issuer or a controlling person within any period of twelve consecutive months, excluding in determining such 70 and 35 persons purchasers and offerees of shares in exempt transactions pursuant both to the provisions of paragraph (b) or (c) of subsection (3) of Section 147.1 of the Illinois Insurance Code, to the provisions of exemptions other than the one established by this Section, and in transactions authorized by a permit issued by the Director under subsection (5) of Section 147.1 of the Illinois Insurance Code, whether such sale or offering is by the issuer or a controlling person, either directly or through an underwriter or dealer acting either as agent or principal; provided, however, this exemption shall become available only upon compliance with the following conditions before commencing any solicitation in this State:

a)         any underwriting agreements entered into in connection with such an offering together with all other pertinent documents and data shall be filed with the Department; and

b)         in the case of a domestic stock company a permit is issued by the Director to issue shares and solicit subscriptions for the same pursuant to Sections 20 or 32 of the Code; or

c)         an exemption ruling in letter or other appropriate form is issued by the Director.

Section 907.60  Dealer Trading

a)         The sale by a dealer, either as principal or agent, of any such shares at a price reasonably related to the current market price of such shares shall be exempt.

b)         The exemption provided in this Section shall apply only if the sale is made in good faith and not for the purpose of avoiding any of the provisions of Section 147.1 of the Illinois Insurance Code, and only if such sale is not made for the direct or indirect benefits of the issuer of the shares, or a controlling person in respect of such issuer (unless the sale is pursuant to Section 147.1 (3) (c) or Section 907.50 of this Part.

Section 907.70  Approved Stock Option Plans

Offers or grants of stock options under plans approved by the Director of Insurance shall be exempt.